September 2020 Senior Loan Officer Opinion Survey on Bank ... · September 2020 Senior Loan Officer...

DIVISION OF MONETARY AFFAIRS For release at 2:00 p.m. ET September 29, 2020

TO: HEADS OF RESEARCH AT ALL FEDERAL RESERVE BANKS

Enclosed for distribution to respondents is a national summary of the September

2020 Senior Loan Officer Opinion Survey on Bank Lending Practices.

Enclosures:

September 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices This document is available on the Federal Reserve Board’s web site (http://www.federalreserve.gov/econresdata/statisticsdata.htm)

September 2020 Senior Loan Officer Opinion Survey on Bank Lending Practices

The Federal Reserve conducted a supplementary Senior Loan Officer Opinion Survey on Bank Lending

Practices (SLOOS) to understand the experiences of domestically chartered banks with the Main Street

Lending Program (MSLP).1 The survey consisted of a set of questions that focused on four areas:

commercial and industrial (C&I) loan inquiries and banks’ participation in the MSLP since mid-June,

when lender registration started; banks’ outlook regarding their participation in the program; factors that

may have shaped banks’ willingness to participate; and characteristics of borrowers inquiring and

receiving MSLP loans.2

Regarding C&I loan inquiries and banks’ participation in the MSLP, respondents indicated that,

on balance, inquiries for C&I loans from borrowers of an eligible size for the MSLP (or “MSLP-sized

borrowers”) were basically unchanged since mid-June, whereas inquiries decreased from Paycheck

Protection Program (PPP)-sized borrowers and borrowers too large to be eligible for the MSLP.3 The

majority of respondents reported that they were registered for the MSLP, with some banks reporting that

they were already underwriting and submitting MSLP loans, and others reporting that they were

preparing to make their first MSLP loans in the coming weeks.

In terms of banks’ outlook for participation, respondents expected C&I loan inquiries to increase

in the next three months from MSLP-sized borrowers, assuming that economic activity progresses in

line with consensus forecasts. However, only a modest share of banks expected their willingness to

extend MSLP loans to increase over the same period.

Regarding factors that may have shaped banks’ participation in the MSLP, the survey inquired

with registered banks about their reasons for not approving MSLP loans and with nonregistered banks

about their reasons for not registering. Registered banks often cited concerns about borrowers’ financial

1 This special edition of the survey was sent out to banks on August 17, 2020 and closed for responses on September 1, 2020. 2 Eighty-six domestically chartered banks responded to the survey, including 33 “large” banks with assets above $50 billion and 53 “other” banks with assets below $50 billion. 3 For the purpose of this survey, we defined “borrowers of an eligible size for the MSLP” as U.S. businesses with at most 15,000 employees in the previous 12 months or at most $5 billion in annual revenues in 2019. Henceforth, we refer to these borrowers as “MSLP-sized borrowers.” Moreover, we defined the “PPP-sized borrowers” as U.S. businesses with at most 500 employees, and “borrowers too large to be eligible for the MSLP” as U.S. businesses with more than 15,000 employees in the previous 12 months and more than $5 billion in annual revenues in 2019. The PPP closed on August 8.

condition before and during the COVID-19 crisis, as well as overly restrictive MSLP loan terms for

borrowers as reasons for not approving MSLP loans. Meanwhile, nonregistered banks mentioned their

ability to provide credit to eligible borrowers without the MSLP, as well as unattractive key MSLP loan

terms for lenders as reasons for not registering.

Regarding borrower characteristics, the survey asked banks about MSLP-sized borrowers

inquiring about C&I loans and about borrowers approved for MSLP loans. Inquiring borrowers

reportedly suffered significant reductions in revenue or employment due to COVID-19, were often

eligible for PPP loans, and had access to alternative bank products other than C&I loans or to alternative

sources of funds other than bilateral bank loans. In contrast, approved borrowers were reportedly even

more likely to be affected by the pandemic than inquiring borrowers, but less likely to have access to

alternative bank products or sources of funds. In addition, approved MSLP borrowers were less likely to

be new clients than inquiring borrowers.

Commercial and Industrial Loan Inquiries and Bank’s Participation in the Main

Street Lending Program

(Table 1, questions 1–3, 5–7, and 13–14; exhibit 1)

Questions on C&I loan inquiries. On balance, banks reported that C&I loan inquiries from MSLP-

sized borrowers, including both informal inquiries and formal loan applications, were basically

unchanged since mid-June.4 Responses varied significantly across bank size groups, and across the

banks within each size group. For instance, while a moderate net fraction of the large banks with total

assets above $50 billion reported that C&I loan inquiries from MSLP-sized borrowers decreased since

4 For questions that ask about inquiries, “net fraction” (or “net percentage”, or “net share”) refers to the fraction of banks that reported inquiries having increased (“increased substantially” or “increased somewhat”) minus the fraction of banks that reported inquiries having decreased (“decreased substantially” or “decreased somewhat”). For questions that ask about the prevalence of given reasons or characteristics, “fraction” (or “percent”, or “share”) simply refers to the percentage of banks that reported a given reason as important (“somewhat important” or “very important”) or to the percentage of banks that reported a given characteristic as common (“somewhat common” or “very common”). For this summary, when inquiries are said to have “remained basically unchanged,” the net fraction of respondent banks that reported either increases or decreases is greater than or equal to 0 and less than or equal to 5 percent; “modest” refers to net fractions greater than 5 and less than or equal to 10 percent; “moderate” refers to net fractions greater than 10 and less than or equal to 20 percent; “significant” refers to net fractions greater than 20 and less than 50 percent; and “major” refers to net fractions greater than or equal to 50 percent. We use similar intervals to refer to the fractions of banks that reported given reasons as important or characteristics as common.

mid-June, a modest net fraction of the other banks with total assets below $50 billion reported that such

inquiries increased.

In contrast to the inquiries from MSLP-sized borrowers, significant net fractions of both the

large and the other banks reported decreases in inquiries from PPP-sized borrowers since mid-June. In

addition, a significant net fraction of large banks reported decreases in inquiries from borrowers that

were too large to qualify for the MSLP. While most other banks did not receive inquiries from

borrowers too large to qualify for the MSLP, a significant fraction of those who received any such

inquiries also reported a decrease in their number since mid-June.

Questions on banks’ C&I loan approvals and MSLP participation. A major fraction of the large

banks reportedly approved at least 40 percent of the C&I loan inquiries that they had received from

MSLP-sized borrowers since mid-June. In contrast, a smaller but still significant fraction of the other

banks approved at least 40 percent of the C&I loan inquiries received from MSLP-sized borrowers.

When asked about the prevalence of MSLP loans among the approved C&I loans to MSLP-sized

borrowers, significant fractions of the large and the other banks reported having approved MSLP loans.5

In most cases, however, the MSLP loans constituted less than 2.5 percent of the number of approved

C&I loans to MSLP-sized borrowers by each participating bank.

Questions on banks’ MSLP registration status. While major fractions of banks in each size group

reported being registered for the MSLP, there were notable differences in their operational status. First,

a significant fraction of the large banks and a moderate fraction of the other banks reported that they

were already underwriting and submitting MSLP loans. Second, significant fractions of banks of all

sizes reported that they were registered and working to operationalize the program in the expectation of

making loans in the coming weeks. Third, a significant fraction of the other banks reported being

registered but still evaluating the program. Lastly, modest fractions of banks of all sizes declared they

were registered, but expected to make MSLP loans only if financial conditions were to deteriorate.

A moderate fraction of large banks and a significant fraction of other banks reported not being registered

for the MSLP. The majority of nonregistered banks reported that they were unlikely to register in the

future.

5 Some banks may have interpreted “underwriting and submitting loans” as planning to do so in the near future, or their loans submitted to the MSLP may still be under review.

Questions on banks’ outlook for C&I loan inquiries and MSLP loan approvals. Among banks

expecting to receive inquiries from MSLP-sized borrowers, a moderate net fraction of the large banks

and a significant net fraction of the other banks reported that they expected C&I loan inquiries from

such borrowers to increase in the next three months under current consensus forecasts. However, only

modest net fractions of banks expected their willingness to extend MSLP loans to increase under current

consensus forecasts.

Considerations Regarding Banks’ and Borrowers’ Participation in the

Main Street Lending Program

(Table 1, questions 8-11; exhibits 2 and 3)

Questions on reasons why registered banks did not approve MSLP loans. Banks that reported being

registered were asked about reasons why they did not approve MSLP loans to borrowers of eligible size

that made C&I loan inquiries. Major fractions of both large and other banks cited the following as

important reasons for not approving MSLP loans: the borrower was already in poor financial condition

before the COVID-19 crisis, the borrower was too severely affected by the crisis to remain viable and

repay the loan, key loan terms were not attractive or prevented the borrower from qualifying, and the

borrowers’ planned use of the MSLP loan was not financially sound.6

Registered banks that reported key MSLP loan terms as not attractive to borrowers or preventing

borrowers from qualifying for the MSLP were asked to provide details about these terms.7 Major

fractions of registered banks of all sizes mentioned borrowers’ debt-to-adjusted-EBITDA ratio being too

high to meet MSLP loan requirements and borrowers’ required certifications and covenants being too

restrictive, such as those limiting debt repayments, compensation, or capital distributions.8 In addition,

6 In addition, major and significant fractions of registered banks in the other size category reported key MSLP loan terms not being attractive enough for the bank, or having approved a PPP loan instead, respectively, as important reasons for not approving MSLP loans. In general, the key loan terms reported as not attractive to the bank mirrored those that deterred banks from registering, discussed next. 7 Exhibit 2 shows the responses on key terms not attractive to the borrower or lender conditional on the sample of registered banks. Table 1 provides unconditional responses while the plotted conditional data are provided on the chart data page. 8 As per the term sheets, MSLP loan amounts are limited to levels that would bring a borrower’s ratio of debt to the adjusted 2019 EBITDA up to either 4 (in the Main Street New Loan Facility) or 6 (in the Main Street Priority and Expanded Loan Facilities). In addition, borrowers are subject to certification requirements and covenants regarding the treatment of existing debt; the expectation to not declare bankruptcy; and restrictions on compensation, stock repurchases, and capital distribution.

major fractions of registered banks in the other size category mentioned the principal amortization

schedule being too steep and the five-year maturity term being too short for the borrower.

Questions on reasons why banks did not register for the MSLP. A vast majority of nonregistered

banks of all sizes reported as an important reason for not registering they were able to address the credit

needs of MSLP-sized borrowers without participating in the MSLP. In addition, major fractions of

banks of all sizes—especially of those in the other bank category—mentioned that key loan terms were

not attractive to the lender, that the PPP was sufficient to address the credit needs of most of their

borrowers, and that the MSLP registration requirements were too burdensome, as reasons for not

registering.9

Banks that reported not registering because key MSLP loan terms were not attractive to the

lender were asked to indicate those terms.10 Major fractions of banks of all sizes indicated that the loss

sharing with the MSLP in the event of a default was too uncertain, and that the required certifications

and covenants were too restrictive for the bank.

Borrower Characteristics (Table 1, questions 4 and 12; Exhibit 4)

Questions on characteristics of borrowers inquiring for C&I loans. Almost all banks in both size

categories that received C&I loan inquiries reported that MSLP-sized borrowers inquiring for C&I loans

experienced significant reductions in their revenue or employment because of the COVID-19 crisis. In

addition, major fractions of banks reported that inquiring borrowers would have also qualified for the

PPP and had access to bank credit products other than C&I loans, such as commercial real estate loans,

home equity lines of credit, or credit cards. Moreover, a significant fraction of banks reported that

inquiring borrowers had access to alternative sources of funding other than bilateral bank loans, such as

equity, corporate bonds, commercial paper, or syndicated loans. Furthermore, a major fraction of banks

mentioned that inquiring borrowers were new clients.

9 Among nonregistered banks in the other size category only, a major fraction also mentioned that key loan terms were not attractive or prevented the borrower from qualifying, and also that MSLP registration was burdensome as reasons for not registering. To a large extent, the most restrictive key loan terms unattractive to the borrower mirrored those that deterred banks from approving MSLP loans. 10 Exhibit 3 shows the responses on key terms not attractive to the lender or borrower conditional on the sample of nonregistered banks. Table 1 provides unconditional responses while the plotted conditional data are provided on the chart data page.

Questions on MSLP borrower characteristics. Regarding borrowers approved for MSLP loans, the

vast majority of banks in both size categories reported that such borrowers experienced significant

reductions in revenue or employment because of the COVID-19 crisis, citing this characteristic as being

“very common” to an even greater extent than in the case of inquiring borrowers. However, in contrast

to inquiring borrowers, lower fractions of banks reported that the approved borrowers could qualify for

PPP loans, had access to alternative bank credit products, or had access to alternative sources of funds.

In addition, a lower fraction of banks reported that approved borrowers were new clients compared with

inquiring borrowers.

Lastly, major fractions of banks reported that it was quite common for approved borrowers to

show intention to use the proceeds to cover payroll and other expenditures for a few months. While a

significant fraction of large banks indicated that approved borrowers intended to fund new capital

expenditures, a major fraction of other banks indicated such intentions. Only a moderate fraction of

large banks reported that approved borrowers intended to use the proceeds to roll over maturing bank

loans or other debt or to offset credit-line cancellations, whereas a major fraction of other banks

indicated such intentions.

This document was prepared by Andrew Castro, Quinn Danielson, Brandon Nedwek, and Andrei Zlate,

Division of Monetary Affairs, Board of Governors of the Federal Reserve System.

Exhibit 1Inquiries, Participation, and Registration for the MSLP

Note: MSLP is Main Street Lending Program. Source: Federal Reserve Board, Senior Loan Officer Opinion Survey on Bank Lending Practices (September 2020).

0

25

50

75

100

Large banksabove $50 billion

Other banksbelow $50 billion

MSLP PPP Non-MSLP MSLP PPP Non-MSLP

Note: 86 banks submitted surveys: 33 large banks with assets above $50 billion and 53 other banks with assets below $50 billion. Banks were asked aboutthe change in commercial and industrial (C&I) loan inquiries from borrowers of a size eligible for the MSLP, that were small enough to also qualify forthe Paycheck Protection Program (PPP), or that were too large to qualify for the MSLP.

Decreased somewhatDecreased substantiallyNo inquiries from mid-June to August

Increased substantiallyIncreased somewhatAbout the same

Percent of respondents

Changes in Inquiries for C&I Loans since Mid-June, by Borrower and Bank Size

0

25

50

75

100


Other banks below $50 billion

Between 10% and 20%Less than 10%

More than 60%Between 40% and 60%Between 20% and 40%


Share of C&I Loan Inquiries Approved

Note: The chart refers to the share of MSLP-sized borrowers that madeC&I loan inquiries and were approved since mid-June.

0

25

50

75

100



Between 2.5% and 5%Less than 2.5% but above 0%No loans from mid-June to August

More than 20%Between 10% and 20%Between 5% and 10%


Share of MSLP Loans in the Approved C&I Loans

Note: The chart refers to the share of approved C&I loans to MSLP-sizedborrowers that were MSLP loans since mid-June.

0

25

50

75

100

RegisteredNot registered

RegisteredNot registered



Note: "Reg." reflects 66 of the 86 banks that submitted surveys andreported that they were registered: 25 large banks and 41 other banks.

Reg., underwriting and submittingReg., working to operationalizeReg., evaluatingReg., only if cond. worsen

Not registered, likely to registerNot registered, will if cond. worsenNot registered, will not register


Operational Status, by Bank Size

0

25

50

75

100

Inquiries Approvals Inquiries ApprovalsLarge banks

above $50 billionOther banks

below $50 billion

Decrease somewhatDecrease significantlyNo inquiries/loans

Increase significantlyIncrease somewhatStay about the same


Outlook for Inquiries and Approvals of MSLP Loans

Note: The chart refers to the number of C&I loan inquiries from MSLP-sizedborrowers and the bank's willingness to approve MSLP loans to borrowers ofan eligible size over the next three months.

Exhibit 2Reasons Why Registered Banks Did Not Approve MSLP Loans


Firm in poor financialcondition pre-COVID-19

Firm too severelyaffected by COVID-19

PPP loan approvedinstead of MSLP

Firm's planned useof MSLP not sound

Key terms not attractiveto the borrower

Key terms not attractiveto the lender

0

25

50

75

100


Reasons Why Registered Banks Did Not Approve MSLP Loans

Not important Somewhat important Very important

Note: This panel covers, at most, 66 banks that reported that they were registered for the MSLP: 25 large banks and 41 other banks.

Borrower debt/EBITDAtoo high

Interest ratetoo high

Principal amortizationtoo steep

5-year maturityterm too short

Minimum loansize too high

Origination andtransaction fees too high

Employee retentiontoo restrictive

Certifications andcovenants too restrictive

0

25

50

75

100


Key Terms Not Attractive to the Borrower, as Reasons Why Registered Banks Did Not Approve MSLP Loans


Note: This panel covers, at most, 48 banks that reported key terms being not attractive to borrowers as an important reason for not approving: 19 large 29 other.

Maximum loansize too low

Origination andservicing fees too low

Lender's retentionshare too high

Loss-sharingtoo uncertain


0

25

50

75

100


Key Terms Not Attractive to the Lender, as Reasons Why Registered Banks Did Not Approve MSLP Loans


Note: This panel covers, at most, 17 banks that reported key terms being not attractive to the lender as an important reason for not approving: 2 largeand 15 other.

Exhibit 3Reasons Why Banks Did Not Register for the MSLP


Met borrowerneeds without MSLP

PPP was deemedsufficient to

meet borrower needs

MSLP registrationrequirement wastoo burdensome

Key terms notattractive tothe borrower

Key terms notattractive tothe lender

0

25

50

75

100


Reasons Why Banks Did Not Register for MSLP


Note: This panel covers, at most, 20 banks that reported they were registered for the MSLP: 8 large and 12 other.

Borrower debt/EBITDAtoo high

Interest rate toohigh for borrower

Principal amortizationtoo steep

5-year maturityterm too short

Minimum loan sizetoo high

Origination andtransaction fees too high

Employee retentiontoo restrictive


0

25

50

75

100


Key Terms Not Attractive to the Borrower, as Reasons Why Banks Did Not Register for MSLP


Note: This panel covers, at most, 9 banks that reported key terms being not attractive to borrowers as an important reason for not registering: 2 largeand 7 other.

Maximum loansize too low

Origination andservicing fees too low

Lender's retentionshare too high

Loss-sharingtoo uncertain


0

25

50

75

100


Key Terms Not Attractive to the Lender, Reasons Why Banks Did Not Register for MSLP


Note: This panel covers, at most, 13 banks that reported key terms being not attractive to the lender as an important reason for not registering: 3 largeand 10 other.

Exhibit 4Borrower Characteristics


New client Borrower reduction inrevenue or employment

due to COVID-19

Borrower hadalternative sources

of funds

Borrower had accessto non-C&I loans

Borrower qualifiedfor PPP

0

25

50

75

100


Characteristics of Borrowers Inquiring about the MSLP

Not common Somewhat common Very common

Note: This panel covers, at most, 83 banks that reported having received C&I loan inquiries from borrowers of a size eligible for the MSLP: 30 largeand 53 other.

New client Borrower reduction inrevenue or employment

due to COVID-19

Borrower hadalternative

sources of funds

Borrower had accessto non-C&I loans

Borrower qualifiedfor PPP

Borrower intendsto cover payroll

Borrower intendsnew capital

expenditures

Borrower intendsto roll over

maturing loans

0

25

50

75

100


Characteristics of Approved MSLP Borrowers

Not common Somewhat common Very common

Note: This panel covers, at most, 23 banks that report having approved MSLP loans: 12 large and 11 other.

Senior Loan Officer Opinion Survey on Bank Lending Practices at Selected Large Banks in the United States

(Status of Policy as of September 2020)

This survey asks about your bank’s lending policies with respect to, and borrower demand for,

commercial and industrial (C&I) loans in the context of the Main Street Lending Program (MSLP).

The survey refers to the time interval since mid-June, when MSLP lender registration began. The

set of 14 questions ask about the C&I loan inquiries and approvals at your bank; the

considerations regarding your bank’s or borrowers’ participation in the MSLP; and your bank’s

outlook on future MSLP demand and participation. For the purpose of this survey, we define

“borrowers of an eligible size for the MSLP” as U.S. businesses with at most 15,000 employees in

the previous 12 months or at most $5 billion in annual revenues in 2019. For details on the MSLP,

see https://www.federalreserve.gov/monetarypolicy/mainstreetlending.htm.

Questions 1 to 6 solicit information on C&I loan inquiries by business borrowers, the

characteristics, and the rate of C&I loan approvals at your bank.

1. At your bank, apart from seasonal variation, how has the total number of C&I loan inquiries from

borrowers of an eligible size for the MSLP changed since mid-June, regardless of whether those

borrowers specifically inquired about an MSLP loan? Please consider informal inquiries as well as

formal loan applications. (For the purpose of this survey, we define “borrowers of an eligible size

for the MSLP” as U.S. businesses with at most 15,000 employees in the previous 12 months or at

most $5 billion in annual revenues in 2019.)

2. At your bank, apart from seasonal variation, how has the number of C&I loan inquiries from

borrowers that are small enough to qualify for the Paycheck Protection Program (PPP) changed

since mid-June, regardless of whether those borrowers specifically inquired about PPP or MSLP

Table 1

1

8 10.1 3 9.7 5 10.4

17 21.5 5 16.1 12 25.0

30 38.0 11 35.5 19 39.6

18 22.8 11 35.5 7 14.6

6 7.6 1 3.2 5 10.4

79 100 31 100 48 100

For this question, 5 respondents answered "My bank has not received any inquiries

from borrowers of an eligible size for the MSLP."

Increased substantially

Increased somewhat

Stayed about the same

Decreased somewhat

Decreased substantially

Total

All Respondents Large Banks Other Banks

Banks Percent Banks Percent Banks Percent

loans? Please consider informal inquiries as well as formal loan applications. (For the purpose of

this survey, the borrowers small enough to qualify for the PPP are U.S. businesses with at most

500 employees. For details on the PPP, see https://www.sba.gov/funding-

programs/loans/coronavirus-relief-options/paycheck-protection-program.)

3. At your bank, apart from seasonal variation, how has the number of C&I loan inquiries from

borrowers that are too large to be eligible for the MSLP changed since mid-June? Please consider

informal inquiries as well as formal loan applications.

4. For borrowers of an eligible size for the MSLP that made a C&I loan inquiry at your bank, how

common were the following characteristics? (Please rate each possible characteristic using the

following scale: 1=not common (e.g., less than 30 percent), 2=somewhat common (e.g., between

30 percent and 70 percent), 3=very common (more than 70 percent).)

6 7.2 0 0.0 6 11.3

9 10.8 3 10.0 6 11.3

26 31.3 9 30.0 17 32.1

20 24.1 11 36.7 9 17.0

22 26.5 7 23.3 15 28.3

83 100 30 100 53 100

For this question, 1 respondent answered "My bank has not received any inquiries

from borrowers that are small enough to qualify for the PPP."

0 0.0 0 0.0 0 0.0

1 2.2 1 3.7 0 0.0

24 53.3 11 40.7 13 72.2

15 33.3 12 44.4 3 16.7

5 11.1 3 11.1 2 11.1

45 100 27 100 18 100

For this question, 39 respondents answered "My bank has not received any inquiries

from borrowers that are too large for the MSLP."

A. The borrower was a new client at my bank.

35 42.2 15 50.0 20 37.7

34 41.0 11 36.7 23 43.4

14 16.9 4 13.3 10 18.9

83 100 30 100 53 100


Increased somewhat


Decreased somewhat


Total


Increased somewhat


Decreased somewhat


Total

Not common

Somewhat common

Very common

Total







5. What share of borrowers that are of an eligible size for the MSLP and made a C&I loan inquiry

were approved for credit at your bank since mid-June? (Please consider approval for both MSLP

loans and other types of loans.)

B. The borrower suffered significant reductions in revenue or employment due to the

COVID-19 crisis that go beyond seasonal or trend changes.

9 11.0 2 6.9 7 13.2

44 53.7 19 65.5 25 47.2

29 35.4 8 27.6 21 39.6

82 100 29 100 53 100

C. The borrower had access to alternative sources of funds other than bilateral loans,

such as equity, corporate bonds, commercial paper, or syndicated loans.

48 58.5 15 51.7 33 62.3

31 37.8 13 44.8 18 34.0

3 3.7 1 3.4 2 3.8

82 100 29 100 53 100

D. The borrower had access to bank credit products other than C&I loans, such as

commercial real estate loans, home equity lines of credit, or credit cards.

30 36.6 12 41.4 18 34.0

43 52.4 14 48.3 29 54.7

9 11.0 3 10.3 6 11.3

82 100 29 100 53 100

E. The borrower could also qualify for PPP loans.

14 17.1 5 17.2 9 17.0

30 36.6 15 51.7 15 28.3

38 46.3 9 31.0 29 54.7

82 100 29 100 53 100

17 21.0 9 31.0 8 15.4

21 25.9 10 34.5 11 21.2

12 14.8 4 13.8 8 15.4

Not common

Somewhat common

Very common

Total

Not common

Somewhat common

Very common

Total

Not common

Somewhat common

Very common

Total

Not common

Somewhat common

Very common

Total

More than 60%

Between 40% and 60%

Between 20% and 40%











6. Of the total number of C&I loans your bank approved for borrowers of an eligible size for the

MSLP, what share were MSLP loans, as opposed to other types of loans?

Questions 7 to 12 solicit information on considerations regarding your bank’s or borrowers’

participation in the MSLP.

7. What best describes your bank’s operational MSLP status? (“Registered” refers to whether your

bank is a registered lender at the MSLP or not. For details on MSLP lender registration, see

https://www.bostonfed.org/supervision-and-regulation/supervision/special-facilities/main-street-

lending-program/information-for-lenders)

9 11.1 0 0.0 9 17.3

22 27.2 6 20.7 16 30.8

81 100 29 100 52 100

2 8.7 0 0.0 2 18.2

1 4.3 0 0.0 1 9.1

1 4.3 1 8.3 0 0.0

2 8.7 2 16.7 0 0.0

17 73.9 9 75.0 8 72.7

23 100 12 100 11 100

For this question, 62 respondents answered "My bank has not approved any loans

intended for the MSLP or is not a registered MSLP lender."

24 33.8 14 51.9 10 22.7

22 31.0 8 29.6 14 31.8

13 18.3 0 0.0 13 29.5

7 9.9 3 11.1 4 9.1

2 2.8 1 3.7 1 2.3

3 4.2 1 3.7 2 4.5

71 100 27 100 44 100

Between 10% and 20%

Less than 10%

Total

More than 20%

Between 10% and 20%

Between 5% and 10%

Between 2.5% and 5%

Less than 2.5% but above 0%

Total

My bank is now underwriting MSLP loans and

submitting them to the program for purchase.

My bank is registered and working to

operationalize the program in the expectation

of making loans in coming weeks.

My bank is registered but still evaluating the

program and how it works.

My bank is registered but will likely only make

loans if financial conditions deteriorate.

My bank is not registered, but will likely

register in the coming weeks.

My bank is not registered, but would likely

register if financial conditions deteriorate.

Total







8. If your bank is not registered for the MSLP, how important were the following reasons in your

bank’s decision to not register for the MSLP? (Please rate each possible reason using the

following scale: 1=not important, 2=somewhat important, 3=very important.)

For this question, 13 respondents answered " My bank is not registered and will likely

not register in the future."

A. My bank was able to address the credit needs of most borrowers of an eligible

size for the MSLP without MSLP participation.

1 5.9 1 16.7 0 0.0

5 29.4 0 0.0 5 45.5

11 64.7 5 83.3 6 54.5

17 100 6 100 11 100

B. My bank judged that participation in the PPP was sufficient to address the credit

needs of most of our borrowers of an eligible size for the MSLP.

5 27.8 3 50.0 2 16.7

10 55.6 3 50.0 7 58.3

3 16.7 0 0.0 3 25.0

18 100 6 100 12 100

C. MSLP registration requirements were too burdensome.

8 47.1 3 50.0 5 45.5

6 35.3 3 50.0 3 27.3

3 17.6 0 0.0 3 27.3

17 100 6 100 11 100

D. Typical borrowers at my bank would not qualify for MSLP loans for reasons other

than size, or would not be interested in MSLP loans.

7 41.2 4 66.7 3 27.3

7 41.2 2 33.3 5 45.5

3 17.6 0 0.0 3 27.3

17 100 6 100 11 100

E. Key loan terms under the MSLP were not attractive enough for my bank.

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total









9. For borrowers of an eligible size for the MSLP that made a C&I loan inquiry and to which your

bank did not approve an MSLP loan, even though your bank was registered for the MSLP, how

important were the following reasons in preventing participation in the MSLP? (Please rate each

possible reason using the following scale: 1=not important, 2=somewhat important, 3=very

important.)

5 27.8 3 50.0 2 16.7

9 50.0 3 50.0 6 50.0

4 22.2 0 0.0 4 33.3

18 100 6 100 12 100

A. The firm was already in poor financial condition before the COVID-19 crisis, such

that the firm would likely be unable to repay the loan.

6 10.5 1 4.5 5 14.3

12 21.1 4 18.2 8 22.9

39 68.4 17 77.3 22 62.9

57 100 22 100 35 100

B. The firm was creditworthy before the COVID-19 crisis, but too severely impacted

to remain viable and hence unable to repay the loan.

13 22.8 2 9.1 11 31.4

22 38.6 7 31.8 15 42.9

22 38.6 13 59.1 9 25.7

57 100 22 100 35 100

C. My bank approved a PPP loan instead, which was considered a better option than

an MSLP loan.

38 69.1 18 90.0 20 57.1

10 18.2 1 5.0 9 25.7

7 12.7 1 5.0 6 17.1

55 100 20 100 35 100

D. The firm's planned use of an MSLP bank loan was not financially sound.

18 31.6 8 36.4 10 28.6

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important











10. If your bank did not approve an MSLP loan or has not registered for the MSLP because the

borrowers would not qualify or not be interested in MSLP loans, how important were the following

considerations? (Please rate each possible consideration using the following scale: 1=not

important, 2=somewhat important, 3=very important.)

13 22.8 4 18.2 9 25.7

26 45.6 10 45.5 16 45.7

57 100 22 100 35 100

E. The borrower did not qualify for MSLP loans for reasons other than size or was not

interested in an MSLP loan.

8 13.8 1 4.8 7 18.9

19 32.8 6 28.6 13 35.1

31 53.4 14 66.7 17 45.9

58 100 21 100 37 100

F. Key loan terms under the MSLP were not attractive enough to make participation

profitable for my bank.

35 63.6 19 90.5 16 47.1

10 18.2 2 9.5 8 23.5

10 18.2 0 0.0 10 29.4

55 100 21 100 34 100

A. The borrower's debt-to-adjusted EBITDA was too high to meet the requirements

for an MSLP loan.

11 19.3 1 4.8 10 27.8

13 22.8 4 19.0 9 25.0

33 57.9 16 76.2 17 47.2

57 100 21 100 36 100

B. The interest rate was too high for the borrower.

44 78.6 16 76.2 28 80.0

8 14.3 3 14.3 5 14.3

4 7.1 2 9.5 2 5.7

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important











56 100 21 100 35 100

C. The principal amortization schedule was too steep for the borrower.

19 33.9 11 52.4 8 22.9

27 48.2 8 38.1 19 54.3

10 17.9 2 9.5 8 22.9

56 100 21 100 35 100

D. The 5-year maturity term was too short for the borrower.

32 57.1 15 71.4 17 48.6

17 30.4 5 23.8 12 34.3

7 12.5 1 4.8 6 17.1

56 100 21 100 35 100

E. The minimum loan size was too high for the borrower.

38 67.9 17 81.0 21 60.0

14 25.0 3 14.3 11 31.4

4 7.1 1 4.8 3 8.6

56 100 21 100 35 100

F. The origination and transaction fees were too high for the borrower.

37 67.3 16 76.2 21 61.8

15 27.3 3 14.3 12 35.3

3 5.5 2 9.5 1 2.9

55 100 21 100 34 100

G. The expectation to retain employees during the term of the MSLP loan was too

restrictive for the borrower.

28 50.0 11 52.4 17 48.6

22 39.3 8 38.1 14 40.0

6 10.7 2 9.5 4 11.4

56 100 21 100 35 100

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total













11. If your bank did not approve an MSLP loan or has not registered for the MSLP because key

MSLP loan terms were not attractive enough for your bank, how important were the following

considerations? (Please rate each possible consideration using the following scale: 1=not

important, 2=somewhat important, 3=very important.)

H. The required certifications and covenants were too restrictive for the borrower,

such as those restricting debt repayments, compensation, or capital distributions.

7 12.7 2 10.0 5 14.3

20 36.4 6 30.0 14 40.0

28 50.9 12 60.0 16 45.7

55 100 20 100 35 100

A. The maximum loan size was too low for my bank.

28 93.3 5 83.3 23 95.8

2 6.7 1 16.7 1 4.2

0 0.0 0 0.0 0 0.0

30 100 6 100 24 100

B. The origination and servicing fees were too low for my bank.

24 80.0 6 100.0 18 75.0

5 16.7 0 0.0 5 20.8

1 3.3 0 0.0 1 4.2

30 100 6 100 24 100

C. The lender's retention share was too high for my bank.

22 71.0 5 83.3 17 68.0

6 19.4 1 16.7 5 20.0

3 9.7 0 0.0 3 12.0

31 100 6 100 25 100

D. The loss-sharing with the MSLP in the event of a default was too uncertain.

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total













12. For borrowers to whom your bank approved a C&I loan intended for the MSLP, how common

were the following characteristics? (Please rate each possible borrower characteristic using the

following scale: 1=not common (e.g., less than 30 percent), 2=somewhat common (e.g., 30

percent to 70 percent), 3=very common (more than 70 percent).)

7 22.6 2 33.3 5 20.0

12 38.7 3 50.0 9 36.0

12 38.7 1 16.7 11 44.0

31 100 6 100 25 100

E. The required certifications and covenants were too restrictive for my bank.

14 46.7 2 33.3 12 50.0

11 36.7 4 66.7 7 29.2

5 16.7 0 0.0 5 20.8

30 100 6 100 24 100

A. The borrower was a new client at my bank.

14 66.7 9 81.8 5 50.0

2 9.5 1 9.1 1 10.0

5 23.8 1 9.1 4 40.0

21 100 11 100 10 100

B. The borrower suffered significant reductions in revenue or employment due to the

COVID-19 crisis that go beyond seasonal or trend changes.

2 9.5 0 0.0 2 20.0

2 9.5 1 9.1 1 10.0

17 81.0 10 90.9 7 70.0

21 100 11 100 10 100

C. The borrower intended to use the proceeds to cover payroll and other

expenditures for a few months.

4 19.0 1 9.1 3 30.0

8 38.1 5 45.5 3 30.0

9 42.9 5 45.5 4 40.0

21 100 11 100 10 100

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total











D. The borrower intended to use the proceeds to fund new capital expenditures.

10 47.6 6 54.5 4 40.0

10 47.6 4 36.4 6 60.0

1 4.8 1 9.1 0 0.0

21 100 11 100 10 100

E. The borrower intended to use the proceeds to rollover maturing bank loans or

other debt, or to offset a credit line cancellation.

11 55.0 9 81.8 2 22.2

6 30.0 1 9.1 5 55.6

3 15.0 1 9.1 2 22.2

20 100 11 100 9 100

F. The borrower had access to alternative sources of funds other than bilateral loans,

such as equity, corporate bonds, commercial paper, or syndicated loans.

16 76.2 9 81.8 7 70.0

3 14.3 0 0.0 3 30.0

2 9.5 2 18.2 0 0.0

21 100 11 100 10 100

G. The borrower had access to other bank credit products such as commercial real

estate loans, home equity loans, or credit cards.

12 57.1 7 63.6 5 50.0

6 28.6 1 9.1 5 50.0

3 14.3 3 27.3 0 0.0

21 100 11 100 10 100

H. The borrower could also qualify for PPP loans.

10 47.6 4 36.4 6 60.0

8 38.1 6 54.5 2 20.0

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important

Very important

Total

Not important

Somewhat important













Finally, Questions 13-14 ask about your bank's outlook regarding future inquiries by eligible

borrowers and your bank's future participation in the MSLP.

13. Looking forward over the next three months and assuming that economic activity progresses in

line with consensus forecasts, how do you expect the number of C&I loan inquiries from borrowers

of an eligible size for the MSLP to change at your bank compared to their current level, apart from

seasonal variation? I expect the number of inquiries to:

14. Looking forward over the next three months and assuming that economic activity progresses in

line with consensus forecasts, how do you expect your bank's willingness to extend MSLP loans to

borrowers of an eligible size change compared to its current level? I expect my bank's willingness

to:

3 14.3 1 9.1 2 20.0

21 100 11 100 10 100

1 1.3 0 0.0 1 2.0

25 31.6 8 26.7 17 34.7

47 59.5 19 63.3 28 57.1

5 6.3 2 6.7 3 6.1

1 1.3 1 3.3 0 0.0

79 100 30 100 49 100

For this question, 7 respondents answered "My bank does not expect to receive any

inquiries from borrowers of an eligible size for the MSLP."

0 0.0 0 0.0 0 0.0

9 13.4 2 7.4 7 17.5

56 83.6 25 92.6 31 77.5

0 0.0 0 0.0 0 0.0

2 3.0 0 0.0 2 5.0

67 100 27 100 40 100

For this question, 19 respondents answered "My bank does not expect to participate

in the MSLP."

Very important

Total

Increase substantially.

Increase somewhat.

Stay about the same

Decrease somewhat

Decrease substantially

Total

Increase significantly.

Increase somewhat.

Stay about the same.

Decrease somewhat

Decrease significantly

Total







1. The sample is selected from among the largest banks in each Federal Reserve District. In the

table, large banks are defined as those with total domestic assets of $50 billion or more as of

March 31, 2020. The combined assets of the 29 large banks totaled $5.2 trillion, compared to

$12.6 trillion for the entire panel of 86 banks, and $17.1 trillion for all domestically chartered,

federally insured commercial banks. Return to text

Last Update: September 29, 2020

September 2020 Senior Loan Officer Opinion Survey on Bank ... · September 2020 Senior Loan Officer...

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